Pension news

Week ending 1 May 2020

Regulator’s annual funding statement

Against the backdrop of the Covid-19 crisis and a country on lockdown, TPR has published its annual funding statement for schemes with a valuation date between 22 September 2019 and 21 September 2020. The Regulator recognises that March/April 2020 valuations will be particularly challenging. Many trustees will not have sufficient information to form a reliable view on their employer’s covenant and affordability at the present time, nor on the expected future level of long-term returns from their scheme’s assets. TPR suggests that trustees could consider delaying decisions about key assumptions until they have more clarity, but instead look initially at a range of different scenarios.

The 10 tables showing the key risks and actions to take, which reflect the sponsor’s covenant strength, the maturity of the scheme’s liabilities and the strength of the existing technical provisions and recovery plan, have not changed from the 2019 statement. Of course, the covenant of the sponsor may well have deteriorated over the past year. The Regulator warns trustees to be particularly vigilant of employer covenant leakage.

TPR also notes that the second consultation on its new DB funding code will be delayed until 2021.

Member communication guidance

TPR has also published guidance on communicating with members, with a view to helping them avoid making hasty decisions at this uncertain time. A template letter has been provided for trustees to send to DB members who are considering a transfer out. This warns the member that it is unlikely to be in their best interests to transfer. The letter is jointly signed by the Regulator, the Financial Conduct Authority and the Money and Pensions Service. The guidance also covers members stopping contributions, pension scams and DC investment market volatility.

Just three buy-ins

Just Group has agreed three pensioner buy-ins with two schemes totalling £226 million. The largest buy-in was for £160 million with the Leonardo Electronics Pension Scheme and was completed in March 2020. The other two deals (£49 million and £17 million) were for the NG Bailey pension scheme.

Recent publications

News

20 November 2020

In the news this week, the second Lloyds judgement says that historic transfer payments need to reflect GMP equalisation, the Pension Schemes Bill moves back to the Lords, TPR gets tough on AE compliance, the FCA surveys DB transfer advisers again and another buy-in is completed.

Arena

Pensions Arena October 2020

This quarter’s Arena has a summary of our recent Pensions Perspective, “Endgame planning comes of age”, which looked at how long-term funding and investment plans are evolving and why companies are increasingly taking the lead in designing an endgame strategy. It also shows all the usual financial and investment analysis for the quarter ending 30 September 2020.

Perspective

Endgame planning

Journey plans or glide paths may have been around for a long time but they’re at the heart of the Regulator’s proposed new funding code. In this Pensions Perspective, Leonard Bowman looks at how long-term funding and investment plans are evolving and explains why companies are increasingly taking the lead in designing an endgame strategy for their schemes.

Arena

Pensions Arena July 2020

This quarter’s Arena has a summary of our recent Pensions Perspective, “Emerging from lockdown”, which looked at how best to tackle the most common pension issues which companies are currently facing. It also shows all the usual financial and investment analysis for the quarter ending 30 June 2020.

Perspective

Emerging from lockdown

As we keep hearing, we are living in unprecedented times. However, as we turn our attention to the future, what does the “new normal” mean for defined benefit pension schemes? In this Pensions Perspective, Leonard Bowman considers the most common pension issues that companies are facing and how best to ensure that the company approaches these on the front foot.

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